New buy to let tax on low income

teddysmum

As Kynthia says, there is no anger; just attempts to make you think realistically.


Of course we could all be wrong, so go ahead, but don't mess up the lives of any poor tenants you have to evict due to your self inflicted money problems.


Yes, some people can be lucky and do well with little outlay, a good tenant and no maintenance problems, but lots aren't and lose everything.


Have a look at cases on the tv programmes (ok specially chosen, but they are real) or consider people like the lady one of my sons rented from , her properties were vandalised, messed about by tenants (These being the only things I know about), but she had to sell up and give up; luckily, though, her husband was able to keep the family home and finances running.

Cakeguts

jamels2 wrote: »

Wow so much anger in the responses, it's a wonder anyone lets out property with all the scare stories. I guess nobody here likes people making money from capitalism and leverage. Well what if you have a tenant with no intention of buying that looks after the property and pays a fair rent? who else they gonna rent from? How else I gonna make an income without giving up 12 hours of my time 6 days a week? Thanks.

It isn't anger. You just don't seem to have done any research into this at all. To get good tenants who look after a property you have to have a good product and you have to be on top of the repairs. A good product means somewhere where people aspire to live not a property that looks like a good rental because it is cheap and you can charge the maximum rent for it. Some repairs wipe out the entire income from a month of rent and you have got to do them if you want to keep your tenants. How are you going to fund the mortgage if you don't get any rent that month? You appear to have overestimated the amount that you will earn from these properties. For a good property you will have to spend money between tenants even if that is only a complete redecoration. To earn enough from a property to cover the mortgage and the expenses of running a rental business you will need a big deposit otherwise you will be running at a loss. If you have an interest only mortgage you have to find a way of paying off the mortgage when the term ends. If you can find a way of paying off the mortgage without selling the property then what is the point of having the mortgage in the first place? Your economic planning doesn't make sense to a landlord. You don't appear to have any idea of the kind of tenant you plan to let to. If you don't work this out you don't know what kind of area to buy in or what sort of property to buy.

jamels2

My position now is I have one let flat to a decent tenant who wants to stay long term. I have built up equity in this flat which my idea was to leave 30% in it and take out 60k for another flat. The rent is easily £850 for this type of property, and the mortgage around £300 I/o. That to me looks acceptable. I would never need to pay off the mortgages as they are interest only and if I ever had to I would sell them.
Thanks for the replies.

AdrianC

jamels2 wrote: »

I would never need to pay off the mortgages as they are interest only

<blink>
That's really not how they work, y'know.

jamels2

When I spoke to a lender about the re mortgage they asked how I intend to pay the loan back once it ends, I said I'd sell the property if I had to repay the loan. They were happy with this. However I'd ideally never sell because I would lose the income.

booksurr

jamels2 wrote: »

When I spoke to a lender about the re mortgage they asked how I intend to pay the loan back once it ends, I said I'd sell the property if I had to repay the loan. They were happy with this. However I'd ideally never sell because I would lose the income.

you are still not showing you understand the basics of what you propose. An interest only mortgage has a term just like a repayment mortgage. When that term runs out the loan has to be repaid in full, in one go, as a lump sum. So if you never sell then that means you will be re-mortgaging at the end of the term
so you can pay off the matured loan.

suki1964

So after 25 years, having paid interest only, Hth so you intend paying back the original loan?

These interest rates are not going to last forever it's not a million years ago interest rates were 15% and more for btl

Cakeguts

jamels2 wrote: »

My position now is I have one let flat to a decent tenant who wants to stay long term. I have built up equity in this flat which my idea was to leave 30% in it and take out 60k for another flat. The rent is easily £850 for this type of property, and the mortgage around £300 I/o. That to me looks acceptable. I would never need to pay off the mortgages as they are interest only and if I ever had to I would sell them.
Thanks for the replies.

This is what we mean by you don't understand and also you don't listen. The mortgage advisor asked you how you were going to pay off the mortgage at the end of the term. You just said that you were not going to sell the properties so where is the money going to come from to pay off the mortgage? Interest only mortgages have terms just like repayment mortgages. Unlike repayment mortgages when you get to the end of the term an interest only mortgage means that you still have a loan of the same amount as you started with you will not have paid anything off it. That is what interest only means. At the end of the term you have got to pay all this money back to the mortgage company. How will you do this without selling the property? You have got to know the answer to this before you take out the loan.

jamels2

What would stop me getting a re-mortgage at the end of the term? Hopefully the ltv by that time will have decrease as well.

Pixie5740

Age and lack of repayment vehicle.